Cluster munitions pose a serious threat to civilian populations during and after a conflict. Cluster munitions are designed to blanket a large area containing one or more targets. They can be fired by artillery and rocket systems or dropped by an aircraft; they spread dozens, or even hundreds, of submunitions or bomblets over an area the size of a football field. Distribution of submunitions over such a broad area results in a large chance of  civilian casualties during and after the attack. Many bomblets or submunitions fail to explode on impact. They remain on the ground like landmines that kill and injure civilians long after the conflict has ended. Although 98% of cluster munitions victims are civilians, cluster munitions producers don’t have any problems attracting capital from financial markets.

The third of December 2008 marked an important day for international humanitarian law. On that day, 94 countries gathered in Oslo to sign the Convention on Cluster Munitions (CCM), a Convention that categorically prohibits the use, production, transfer and stockpiling of cluster munitions. 100 countries have agreed to ban these weapons by signing the CCM. Financial institutions should avoid any involvement in the manufacture of these weapons.

Credit to cluster munitions producers has been common over the years, and looks set to continue unabated if due attention is not given. Fortunately, parallel to the Oslo process, more and more financial institutions have recognised their responsibility to withdraw support for companies manufacturing cluster munitions. These financial institutions have banned cluster munitions producers from their investment portfolio. Many financial institutions have stated in public that they will disinvest from cluster munitions producers; some of them have already done so.

Although some financial institutions have made an effort to disinvest from cluster munitions, many find it difficult to implement their policy or have no policy (yet) on investment in companies that produce cluster munitions.

In February 2007 and after years of campaigning by Netwerk Vlaanderen, the Belgian Parliament voted  a law forbidding any investment in cluster munition producers by Belgian financial institutions. (“Financing a Belgian or foreign company active in production, usage, repair, offer, sale, delivery, import, export or stocking of submunition in the sense of this law, is also forbidden.”) The law also instructs the Belgian government to produce a list of cluster munition producers. Belgium is the first country banning investments in cluster munitions.

In July 2005 a European Parliament Resolution “Calls on the EU and its Member States to prohibit through appropriate legislation financial institutions under their jurisdiction or control from investing directly or indirectly in companies involved in production, stockpiling or transfers of anti-personnel mines and other related controversial weapon systems such as cluster sub-munitions.”

This resolution forms the perfect starting point for national legislation against investments in weapons producers and traders.